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Robin D., Senior Tax Advisor 4

Category: Tax

Satisfied Customers: 8631

Experience: 15years with H & R Block. Divisional leader, Instructor

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Hi, I am on H1B visa working in USA from last 6 years. I sold

Resolved Question:

Hi, I am on H1B visa working in USA from last 6 years. I sold company granted stocks of worth $25000 last year by filling form W-8BEN online thinking that I am non-resident alien. Now I just realized that I am a resident alien and I should have filled form W-9 instead of W-8BEN. Now stock agent has sent me 1042 instead of 1099. They said that they can not provide me 1099 now. I need to know what should I do now. How I will file this stock sale with IRS?

Hello and thank you for using Just AnswerAs a resident alien you will be filing Form 1040 so you will use the Schedule D to show the sale of stock.

Robin D :

Thank you in advance for clicking ACCEPT

Customer:

Hi I am a new user on justanswer, just tried to understand how this website works

Customer:

But I will be receiving 1042 instead of 1099

Robin D :

You still need to show the sale on your tax return. If they withheld then you would show the tax withheld also on your 1040 but the sale must be reported on your 1040 using the Schedule D

Robin D :

This will require you to report the basis and sales price.

Customer:

Sorry, I have very little idea about fax filing. So I need to chat little bit to get more idea

Customer:

so I have 1042 from the Morgan Stantley

Customer:

so when I will file the tax. I should show the sale in schedule D instead of mentioning 1099 OR 1042?

Robin D :

Neither of those would be attached to your return anyway.

Customer:

also first of all I want to know that is that a problem that I used W-8BEN by mistake even if I am resident alien?

Customer:

I am just worried

Robin D :

For Morgan Stanley, the W8 is held by them to show why they did not withhold on the sale if they were required to withhold.

Customer:

how can I notify IRS about this mistake?

Robin D :

The 1042S was sent to the IRS already so they know about the stock sale. WHen you report it on your retrun then you have met your responsibility.

Robin D :

You do not need to report the misclassification to the IRS

Customer:

but can IRS question me why I filled W8 form even if I am a resident alien?

Robin D :

They would ordinarily understand, if, they were to request the information. The W8 would have allowed you to claim a treaty benefit. You are not doing that because you know you are not allowed and you are going to report the sale on your return.

Customer:

So, I should just report $ numbers from 1042 in schedule D, that's it?

Robin D :

YOu need to use the Schedule D to report the sale, if the 1042S is correct with the cost and the slaes rice then yes, use those numbers.

Customer:

ok one last question

Customer:

You said "You still need to show the sale on your tax return. If they withheld then you would show the tax withheld also on your 1040 but the sale must be reported on your 1040 using the Schedule D"

Customer:

so here they means - Morgan Stantley OR IRS?

Robin D :

Morgan Stan

Customer:

Ok

Customer:

they did not withhold anything from the profit I made, so IRS will withhold tax from the profit right?

Robin D :

No, you will calculate the tax on your return. The gain will be added to your other income and then taxed. Withholding can only happen before a payment is made. Morgan Stanley would have withheld had you not signed syaing you were exempt basedon treaty or some other reason, but as a resident alien you did not need to fill out anything really. You just get taxed like a US citizen, which is to show it on your Schedule D and 1040.Thanks again and you can always come back even after you click ACCEPT

Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with. OrvilleHesperia, California

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